Brent crude edges up as German growth supports

NEW YORK (Reuters) - Brent crude prices stabilized on Tuesday after a slump that erased $10 this month as surprising German economic growth offered a respite from more euro-zone debt problems.

Better-than-forecast German first-quarter GDP data raised hopes that Germany might steer its way through the European debt crisis, even as the euro-zone economy stagnated and posted zero growth in the quarter, but avoided a recession.

Greece faces a new election after attempts to form a government collapsed on Tuesday, reinforcing the possibility that parties opposed to the terms of a European Union bailout could win power in a June election.

The Greece political impasse weighed on equities, sent the euro to a four-month low against the dollar and key industrial feedstock copper to its own four-month low.

Trading was choppy and U.S. crude slipped for a third straight session ahead of weekly industry and government oil inventory reports that are expected to show an eighth consecutive rise in crude stocks.

"The German GDP gave the market a little hope and recent problems at the North Sea Buzzard field and Europe's refineries due back from seasonal maintenance have provided Brent with support," said Andy Lebow, senior vice president energy futures at Jeffries Bache LLC.

Brent June crude rose 38 cents to $111.95 a barrel by 2:06 p.m. EDT (1806 GMT), recovering from a $110.93 low.

Brent fell to $110.04 on Monday, after reaching $120.02 on May 1, as OPEC's increased production, rising U.S. inventories and signs of slowing economic growth weighed on prices.

Revived talks between Iran and major powers, with a second round of negotiations set for later this month in Baghdad, also helped pull oil prices back by easing fears of supply disruptions and regional conflict.

U.S. June crude was down 60 cents at $94.18 a barrel, having reached $95.48. Tuesday's slip to $93.83 stalled above the $93.65 low from the previous session, which was the lowest intraday price since December 19.

Brent and U.S. crude, heating oil and gasoline futures all continued to sport relative strength index (RSI) readings below 30 after recent price slides. A reading below 30 suggests an oversold condition to investors who follow technical indicators.

The June Brent contract's premium to U.S. June crude pushed above $18 a barrel, up more than $1, as the Brent June contract neared its expiration on Wednesday.

The spread between July contracts hovered near $16.75 a barrel, up from Monday, ahead of this week's planned reversal of the Seaway crude pipeline. The pipeline reversal will allow stockpiles bottlenecked in the U.S. Midwest to be sent to the refinery-rich Gulf Coast.

U.S. OIL INVENTORIES

Anticipation that weekly inventory reports will show U.S. crude stocks rose last week, adding to stockpiles at Cushing, Oklahoma, helped hem in U.S. crude prices and increase its deficit to Brent, brokers and traders said.

Distillate stocks were pegged to be unchanged and gasoline stocks to be 200,000 barrels higher.

U.S. crude oil stockpiles have reached the highest level since August 1990 and stockpiles at Cushing, the delivery point for the U.S. light sweet crude contract, were at a record high above 44 million barrels as of May 4.

U.S. gasoline demand increased 4.5 percent last week from the previous week as pump prices fell, MasterCard said in a weekly report, but demand remained down versus year ago, by 3.6 percent.

Increased production from Saudi Arabia, Libya and Iraq have helped cushion global supply as U.S. and EU sanctions continue to limit Iran's exports ahead of an EU embargo on Iranian barrels set for July.

The U.N. International Atomic Energy Agency and Iran will meet again next week after a "good exchange of views" during two days of talks on Tehran's disputed nuclear program, a senior U.N. official said Tuesday.

(Additional reporting by Gene Ramos in New York, Julia Payne in London and Jessica Jaganathan in Singapore; Editing by Bob Burgdorfer and Sofina Mirza-Reid)

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